Some American celebrities, including Kim Kardashian, are facing a lawsuit for allegedly misleading investors by promoting a cryptocurrency.
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According to a complaint filed in a Los Angeles court, Kardashian, among others, was paid to create hype around the cryptocurrency EthereumMax. For example, the celebrities would have made a profit on the caps of their fellow investors.
“Are you into cryptocurrencies?” Kardashian wrote, followed by a disclaimer “this is not financial advice.” She wanted to share what her “friends just told her about EthereumMax”. The post also had the hashtag #AD, indicating that it was a paid ad. Kardashian has 250 million followers on Instagram alone.
According to the complainants, EthereumMax appears to be highly speculative, with no link to Ethereum, the second largest cryptocurrency in the world. Other celebrities, such as boxer Floyd Mayweather, are also mentioned in the complaint.
According to the New Yorker there is a typical ‘pump and dump’ in consultation with the creators of EthereumMax. Influencers hype a crypto coin. Their followers jump on the train, which boosts the price. After that, investors from the first hour sell their cryptocurrencies with big profits. That lowers profits, and then collapses.
The complaint was filed as a class action by a New York resident who purchased the virtual currency and lost money.
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